There exists a class of problems whose solutions depend partly on external independent environmental variables and partly on variables whose values in solutions are determined by the persons who need the problems solved. It is an additional characteristic of problems of this class that both the problems and their solutions are capable of complete definition by use of machine readable, machine manipulable data elements.
One illustrative example is purchasing problems in which existence of a solution to a particular problem depends partly upon external independent variables such as availability of goods, types of goods available, and prices of goods available. In the purchasing example, some variables are set by purchasers, the person interested in solving the purchasing problems, such variables including, for example, the characteristics of goods sought, timing of purchases, quantities sought, and so on. For such problems, a complete solution can be specified by source, price, and description of goods.
If for example, a customer wished to purchase one automobile of a particular year, manufacture, model, color, and maximum price, these facts can be recorded and defined to represent a purchasing problem. If sources, automobile dealerships, can be identified where cars with those characteristics can be purchased, these facts can be recorded and defined to represent solutions to the purchasing problem. If, before a customer presents an actual purchasing problem, such problems are defined, and if good and current solutions for the problems are sought out and recorded, then, if the customer's purchasing problem matches one of the recorded predefined solutions, from the customer's point of view, the customer's purchasing problem can be matched with good solutions extremely quickly.
Another illustrative example is purchasing securities. It is typical in securities purchasing for a customer or client to identify by symbol the particular securities sought for purchase and the quantity sought. Optionally clients can specify price, market, and other values. External independent variables not in the client's control include, for example, actually available quantities and prices. If a customer order is viewed as presenting a purchasing problem, i.e., where to purchase a certain quantity of a certain security, then a complete solution to the problem can be defined as identifying one or more markets from which can currently be acquired, in a single purchase or in several smaller purchases, a quantity of the securities specified in the customer order.
In prior art, when an order for securities is received from a client, a securities broker-dealer must laboriously, case-by-case, check present market information to determine whether there are available sources to solve the purchasing problem or problems posed in the client order. Even when the process is automated, it is still labor intensive. Many broker-dealers still aggregate orders. In broker-dealer systems capable of single order processing, however, this process in prior art typically is carried out for each order individually. This procedure in prior art is computationally demanding for each order, and dealers receive many, many orders. There is a need for a way of generating solutions to securities purchasing problems posed by purchase orders before the problems are posed, before the orders are received. Such a way of generating solutions would be useful not only for purchasing securities, but also for many different kinds of activities that present problems capable of precise advance definition and advance generation of well defined solutions.
In the field of securities trading, a common problem of prior art is identifying natural buyers and seller, referred to collectively as “natural traders.” “Natural Trader” indicates a source of securities trades, either sales or purchases, in which available quantity is larger than quoted quantity, that is, there exists “hidden liquidity.” Natural traders exist because sources of large volumes of securities trading liquidity, such as institutions, cannot quote their entire available quantity without artificially distorting prices due to extreme, actual or perceived, fluctuations in supply or demand. Natural traders are identified by a tendency to continuously requote after trading or by their tendency to fill orders with quantities larger than the quantities displayed in their quotes. It is advantageous for traders seeking to increase or decrease substantial positions to be able to identify reliable sources of liquidity, even if the sources are not displaying the actual levels of liquidity available through them. In prior art, however, identifying reliable sources of undisplayed liquidity has been a hit or miss activity conducted manually by traders using human reaction time. What is needed is an automated method of identifying, and trading based upon the identification, of natural traders.
An additional difficulty in prior art in the field of securities trading is that market quotes upon which trading and investment decisions are based, more or less by definition, embody no indication of hidden liquidity. Prior art leaves traders and investors upon their own resources, using human perception and response times in observation of quotes and trade data, to detect sources of hidden liquidity. What is needed, both for automated trading and for display to human beings for their use in analysis and decision-making, is a form of quote that includes an indication of hidden liquidity.